KENNETH D. ROSEN, AND HARVEY M. ROSEN, TRUSTEES, APPELLANTS,
v.
GEORGE G. HUNTER AND BARBARA C. HUNTER, HIS WIFE, E. E. SWARTSWELTER, AND MARTHA H. SWARTSWELTER, HIS WIFE, AND J. H. EARLY, APPELLEES

Fla. 3d DCA | 1969-06-24
No. 68-805
Before PEARSON, HENDRY and SWANN, JJ.
224 So. 2d 371 Florida District Court of Appeal, Third District (1969) Positive Treatment
Cited by 12 cases

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Synopsis

Appellants Rosen purchased foreclosed property at a sale for $36,000, but the trial court rescinded the sale based on the defendants' alleged mistake and inadequacy of price. The appellate court reversed, holding that the defendants failed to establish mistake or inadvertence, and that inadequate price alone does not justify rescission absent fraud, collusion, or other equitable grounds.


Holding

The court held that the trial court erred in finding that the foreclosure sale resulted from the defendants' mistake and inadvertence, as the record established that no attorney-client relationship was formed and the defendants were adequately apprised of the proceedings. The court also held that inadequacy of price alone is insufficient to set aside a confirmed foreclosure sale absent fraud, collusion, mutual mistake, breach of trust, or other misconduct, and that the appellants were not barred by the acceptance of benefits doctrine when they received a refund of their deposit.


Key Quotes

“It is by no means a matter of discretion with the court to rescind a sale which it has once confirmed, nor is the sale to be rescinded for mere inadequacy of price, or for an increase of price alone, irregularity, and the like. Some special grounds must be laid such as fraud and collusion, accident, mutual mistake, breach or trust, or misconduct upon the part of the purchaser, or other party connected with the sale, which has worked injustice to the party complaining and and was unknown to him at the time”

Establishes the legal standard that foreclosure sales cannot be rescinded for inadequacy of price alone without special equitable grounds such as fraud or mistake.

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Facts & Procedural History

The Swartswelters borrowed money secured by a first mortgage to the Hunters ($20,000) and a second mortgage to Early ($10,000). When the Swartswelters…

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Opinion of the Court
HENDRY, Judge.

HENDRY, Judge.

The appellants were the successful purchasers of real property at a foreclosure sale which was held pursuant to a final judgment of foreclosure entered by the trial court against the Swartswelters, appellees, and which judgment was in favor of the Hunters, two other appellees. The property in question was encumbered as follows: (a) first mortgage given by Swartswelters to the Hunters in the amount of $20,000; (b) second mortgage given by the Swarts-welters to J. H. Early, the remaining ap-pellee here, in the amount of $10,000.

As time progressed, the Swartswelters fell behind on their obligation under the first mortgage, and thereafter the first mortgagees, Hunters, foreclosed. Default judgment was entered against the Swarts-welters, and on March 11, 1968, the trial court entered final judgment against all the defendants in the Hunters’ foreclosure action, ordering the clerk of the court to offer the property for sale.

However, on April 5, 1968, the Swarts-welters filed their motion to set aside the order of sale, which the court heard and considered as objections to the sale. After a hearing was held on the above pleading, the court entered its order dated May 9, 1968, which rescinded the foreclosure sale, setting forth the court’s grounds for such rescission, infra. The appellants filed their petition for rehearing, which was denied by order of court. This appeal is from that order of the court which denied the motion for rehearing.

Although the appellant has addressed his notice of appeal to a nonap-pealable order which denied his petition for rehearing, he has properly identified the proceedings being appealed, i. e., the order rescinding the foreclosure sale. Moreover, no genuine prejudice has resulted to the appellee, and jurisdiction being discretion*373ary with this court, we shall treat the appeal as one properly taken. State ex rel. Poe v. Allen, Fla.1967, 196 So.2d 745; Florida Appellate Rules, Rule 3.2, 32 F.S.A. We also note that a full appeal has been taken from post-decretal proceedings which are actually interlocutory in nature. This appeal, although final in form, will therefore be treated as a perfected interlocutory appeal on the authority of Helker v. Gouldy, Fla.App.1966, 181 So.2d 536, and Burton v. Sanders, Fla.App.1965, 170 So.2d 591. See also Florida Appellate Rules, Rule 4.2.

That order of the court which rescinded the foreclosure sale reads as follows:

“2. That subsequent to the service of process upon Defendants at the commencement of the proceedings, said Defendants retained an attorney to represent them in negotiations for settlement of the suit by reinstatement of the mortgage or otherwise and that Defendant’s attorney did have some contact with Plaintiffs and that Defendants believed that the foreclosure suit would not proceed to final judgment while negotiations were pending and that Default, Final Judgment, and Order of Sale were entered in this cause without the knowledge of Defendants;
“3. That Defendants have the means to refinance their property or to offer a higher bid at sale of the property than was obtained at the foreclosure sale;
“4. That the fair value of the property is somewhere between the $50,000.00 testified to by the purchaser’s appraiser and approximately $80,000.00 as testified to by Defendants and their appraiser;
“5. That said property went to foreclosure sale by reason of mistake and inadvertence of Defendants;
“6. That while the $36,000.00 sale price obtained at foreclosure sale would not ordinarily shock the conscience of the Court, the Court is of the opinion that said sale price is inadequate under the circumstances of this case and would amount to an inequitable forfeiture by Defendants; * *

However, our view of the record does not support the finding by the circuit judge that “said property went to foreclosure sale by reason of mistake and inadvertence of defendants.” Rather, the record clearly indicates that the acts which Mr. Swartswelter alleged werel a retainment of counsel by him, fell short of establishing an attorney-client relationship;1 *374that the communications from the attorney for the first mortgagee in regard to settlement and dismissal of the foreclosure suit were mailed directly to Mr. Swartswelter;2 and finally, that the certificates of service, summonses, and pleadings established that *375the Swartswelters were adequately and completely apprised of the foreclosure proceedings from date of commencement up to and including the foreclosure sale itself. We therefore, hold that it was error and an abuse of discretion for the circuit judge to have found mistake and inadvertence.

Appellants also seek reversal of the rescission order based on the general rule that a foreclosure sale may not be set aside unless there is a showing of fraud or mistake connected with the sale, or unless there is a showing that the price paid by the successful bidder was inadequate. As to that part of the general rule relating to fraud or mistake connected with the sale, see Watson v. Vafides, Fla.App.1968, 212 So.2d 358; 601 West 26 Corp. v. Equity Capitol Company, Fla.App.1965, 177 So.2d 739. Neither fraud nor mistake connected with the sale (such as improper description of the property, 601 West 26 Corp. v. Equity Capitol Company, supra) has been made to show here.

As to the second part of the general rule set forth above, i. e., that a foreclosure sale will be set aside when the price paid by successful bidders is inadequate, there is a general recognition in the common law that foreclosure purchases are rarely comparable to the fair market value of the property. This view was well stated in the case of McCann v. City of St. Petersburg, 145 Fla. 158, 199 So. 264, wherein the Supreme Court held a decree which confirmed a sale of real property for the city improvement liens not amenable to rescission when the record showed that reasonable cash value of property was $10,000, while the amount received at sale was $3,400. It was said by the court as follows:

“It is by no means a matter of discretion with the court to rescind a sale which it has once confirmed, nor is the sale to be rescinded for mere inadequacy of price, or for an increase of price alone, irregularity, and the like. Some special grounds must be laid such as fraud and collusion, accident, mutual mistake, breach or trust, or misconduct upon the part of the purchaser, or other party connected with the sale, which has worked injustice to the party complaining and and was unknown to him at the time % % %

See also Maule Industries, Inc. v. Seminole Rock and Sand Co., Fla.1957, 91 So.2d 307; Waybright v. Turner, 129 Fla. 310, 176 So. 424; Ruff v. Guarantee Title & Trust Company, 99 Fla. 197, 126 So. 383; O’Neal v. McElhiney, Fla.App.1965, 172 So.2d 492.

Confronting us here is the appellees’ contention that the property in question has a fair market value of $75,000. However, such allegation cannot override the fact that the price paid by the appellants was in full accordance with the law, and was in excess of final decree entered by the trial court. There are no allegations as to collusion, accident, mutual mistake, breach of trust, or any other form of fraud or misconduct upon the purchasers or other parties connected with this particlular foreclosure sale. Moreover, since the successful bidders and purchasers paid an amount which exceeded the judgment entered in the court’s final decree, there is no question involving a deficiency which would invoke further equities into the case.

The appellees also argue that the doctrine of acceptance of benefits applies, which would in effect prevent the appellants from prosecuting this appeal. The rationale underlying this theory is that, once the rescission order was entered by the court, the appellants received a refund of the $36,000 they had paid into the court’s registry at the foreclosure sale. Appellees contend that acceptance of the refund constitutes an acceptance of benefits according to the doctrine. See Capitol Finance Corp. v. Oliver, 116 Fla. 790, 156 So. 736; Sedgewick v. Shaw, Fla.App.1966, 188 So.2d 29. However, we do not feel that the facts in this case constitute a situation governed by the ..acceptance of benefits doctrine. Here, the appellants did not receive anything, when they were refunded the *376money they paid at the foreclosure sale, by way of decree or judgment which they were not previously entitled to. The appellants merely received funds which they had deposited with the registry of the court pending the final .outcome of foreclosure sale. See Brown v. Epstein, Fla.App.1968, 208 So.2d 836.

For the reasons expressed herein, we hereby reverse the order being appealed.

Reversed.


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Citator

Cited By

  • Robustiano Puga & Medmold, Inc. v. Suave Shoe Corp., 417 So. 2d 678 (Fla. 3d DCA 1981)
    …HUBBART, Chief Judge (concurring) I concur in the court’s decision to rehear this cause en banc under Fla.R.App.P. 9.330(a), although I think the panel’s order of dismissal more properly creates an in-tradistrict conflict with Rosen v. Hunter, 224 So. 2d 371 (Fla. 3d DCA 1969).1 I also concur in the court’s decision to deny the appellee’s motion to dismiss the instant appeal, although I would do so on a much narrower legal ground than that stated in the court’s opinion herein.2 I I would treat the ins…
    1 / 2
  • Small v. Small, 313 So. 2d 749 (Fla. 1975)
    …Rules. . Rule 4.2(b), Florida Appellate Rules. . Rule 1.3, Florida Appellate Rules. . Rule 4.2(a), Florida Appellate Rules. . See Note 5, supra. . See Note 6, supra. . See also Crepaldi v. Wagner, 128 So. 2d 759 (Ma.App.1961); Rosen v. Hunter, 224 So. 2d 371 (Ma.App.1969); Washington Sec. Co. v. Tracy’s Plumbing & Pumps, Inc., 166 So. 2d 680 (Ma.App.1964). .19 Ma.Jur. 124, 131, Judgments and Decrees, §§ 111, 116.…
  • Rosen v. Hunter, 227 So. 2d 689 (Fla. 3d DCA 1969)
    …HENDRY, Judge. Kenneth D. Rosen and Harvey M. Rosen, trustees, have moved for an order on the mandate which was filed pursuant to the opinion originally rendered in this cause, Rosen v. Hunter, Fla.App.1969, 224 So. 2d 371. The original position of the parties in trial was as follows: the Swartswelters, appellees herein, were the defendants in a foreclosure action brought by the Hunters as plaintiffs. The Rosens, appellants herein, were intervenors below, having been…

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